United Rentals to Acquire NES Rentals

$965 million transaction will expand United Rental's presence on the East Coast, Gulf States and the Midwest

January 26, 2017

United Rentals will acquire NES Rentals under a definitive agreement announced this week. The deal is for approximately $965 million in cash and is expected to close early in the second quarter of 2017, subject to Hart-Scott-Rodino clearance and customary conditions.

The board of directors of United Rentals and Diamond Castle Holdings LLC, the majority owner of NES, unanimously approved the agreement. T

United Rentals has 887 rental locations in North America, and 12,500 employees. NES specializes in aerial equipment at 73 branches and has approximately 1,100 employees, with a concentration in the eastern half of the United States.

The addition of NES's branch footprint will increase United Rental's density in strategically important markets, including the East Coast, Gulf States and the Midwest, United Rentals says. It expects the combined operations to strengthen the company’s relationships with local and strategic accounts in the construction and industrial sectors.

The combined operations are also expected to create meaningful opportunities for cost synergies in areas such as corporate overhead, operational efficiencies and purchasing. United Rentals and NES share many cultural attributes, including a strong focus on safety, a customer-first business philosophy, and best practices for talent development and retention.

NES employees will bring a wealth of experience to United Rentals, and will have greater opportunities for career development within the larger combined organization. United Rentals will acquire NES for a purchase price of $965 million in cash. Net of synergies, this represents a multiple of 4.9 times EBITDA for the year ended December 31, 2016, and an adjusted purchase multiple of 4.3 times, including the value of acquired tax assets.

The transaction is not conditioned on financing. United Rentals expects to use a combination of cash, existing capacity under its ABL facility, and newly issued term debt to fund the transaction and related expenses.

Michael Kneeland, president and chief executive officer of United Rentals, said, “The NES agreement satisfies the rigorous strategic, financial and cultural standards we set for acquisitions. This exciting transaction will augment our revenue, earnings, EBITDA, free cash flow and overall scale, and expand our base of local and strategic accounts at a key point in the demand cycle.

“In NES, we’re acquiring a well-run operation that’s primed to benefit from our technology, infrastructure and cross-selling capabilities," he said. "Most importantly, we’re gaining a great team that shares our intense focus on safety and customer service. We’ll be working side by side throughout the integration to capitalize on best-in-class expertise from both sides. We look forward to welcoming the NES team to United Rentals.”